The value of NFTs drops with that of cryptocurrencies, if not more

NFTs do not thwart the downtrend of the crypto market, far from it. In the last seven days, the famous tokens have sunk as much as their big sister, if not more. The average selling price of a Bored Ape Yacht Club (BAYC), the collection that sets the tone in the market, has dropped 35% in one week, according to OpenSea, from 147.33 ethers on May 5 to 109.30 ether on May 11.

The fall is all the more acute as ether, too, fell over the period (-15%, to 2,380.00 dollars). The average price of a Bored Ape therefore fell from $432,000 seven days ago to just over $262,000 at the current ether price, amplifying the BAYC decline to -39%. The number of traders meanwhile fell by 30%, according to DappRadar, and the number of transactions fell by 24%.

For their part, the main cryptos have also lost a lot of ground in the last seven days. Bitcoin fell 19% from May 5-11, according to Coingecko, ether dropped 17% and BNB (Binance) -20%. But it’s a bit less than NFTs.

JPG NFT index down 26%

Like bitcoin in the crypto market, a decline in BAYC in NFTs – still first, with $2.37 billion in capitalization – is never a good signal. Other collections fell this week. CryptoPunks (number 2) saw their volumes decline by 24.5% over seven days. According to NFT Price Floor, they are even accelerating their fall, with -63% in the last 24 hours.

It’s also bleak for Azuki’s manga-style avatars, whose floor price was almost divided by three in one week. Same trend with other famous NFTs like Doodles (-15%), Meebits (-23%) or Moonbirds (-22%). The JPG NFT index, which reflects a large basket of tokens, for its part, fell by 26% last week.

The specter of illiquidity?

At least two reasons explain this decline. The first is that when it comes to risky asset classes, NFTs are a subcategory of cryptocurrencies. And when it is doing badly, the one who depends on it cannot resist. The second, more structural, is a trend towards a slight decline in the market observed since the first quarter of 2022, with -6% in sales, according to NunFungible.

But unlike cryptos, NFTs could come to suffer from their volumes. As Michael Bucella, a partner at BlockTower Capital Advisors, explained to Bloomberg, “these are pretty illiquid markets.” In other words, “if the market sells in droves, they will liquidate everything”.

Even Otherdeed NFTs are caught in the trend. These plots of metaverses sold by Yuga Labs – the creator of BAYC – saw their average price drop by 23% over seven days, according to OpenSea, to 7.60 ethers (18,000 dollars). When they were put on sale at the end of April, they had however torn off, with the idea that there was a real Web3 project beyond mere speculation.

While observers predict a rationalization of the market, the current crisis may accelerate the phenomenon. By shaking the coconut palm of the NFTs, the rotten fruits could fall to let the most promising ones grow.

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The value of NFTs drops with that of cryptocurrencies, if not more


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